County looks at oil, natural gas equipment as new source of revenueBy Scarlet SimsReporter

Pope County will be the first county in Arkansas to hire an outside appraisal service to assess and value local natural gas and oil-well equipment, according to Karen Martin, Pope County tax assessor.

After voting in the last-minute addendum to the agenda, the Pope County Quorum Court hired Visual Lease Services, Inc., an appraisal company in Oklahoma, under a one-year contract for $139,000, during the court's monthly meeting Thursday.

The company will assess equipment, including drilling rigs, pipelines and gas and oil wells, Martin said.

The contract will be paid in installments with 88.8 percent of the money coming from superintendents funds, county officials said. The court also approved a new budget that reflected paying the $20,000 to $30,000 installments.

Martin, a proponent of the ordinance, said the court had to act immediately in hiring VLS to receive 2006 tax revenue this year. VLS must meet a July 1 deadline in assessing gas and oil equipment, she said.

VLS would continue assessing past July 1, and any added equipment would be put on the 2007 tax year. She said the taxes would go back three years, starting with 2006.

The assessments could bring in thousands, if not millions of dollars, in ad valorem tax revenue for the county, Martin said.

"There's a lot of equipment out there," she said, noting mineral rights would not be effected. "It should be taxed, because it is taxable."

Martin would not give an estimate on how much money could be found through VLS, but suggested it could be more than $1 million based on counties assessed by VLS in Oklahoma.

"The first year's the biggest (financial windfall), but they're (gas wells) on the books from then on," said Henry Jacobs, chairman of the Pope County Equalization board that supported hiring VLS. "If I've got to pay my taxes, I want them (equipment owners and gas companies) to pay theirs."

None of the county appraisers are qualified to appraise this kind of equipment, Martin said. About 472 gas wells are currently in Pope County, along with pipelines, she said.

VLS started began appraising gas and oil equipment in 1998. The company is credited with discovering thousands of dollars in under-appraised or unappraised equipment in Oklahoma counties, according to a material packet Jacobs and Martin passed out to the court.

Some gas companies, however, have said that VLS overvalued equipment, raising the fair market value, according to news articles. Trespassing issues have also been brought up against the company.

The county received a 20 percent discount from VLS for being the first county in Arkansas to agree to the contract. The county could hire VLS under a maintenance contract to inspect equipment yearly for about $30,000 a year.

"To me, that would be cheap," Martin said, noting it was the cost of one full-time employee.

Martin said she has spoken to only two superintendents about the contract, Dover and Pottsville. She said both had orally supported the plan but only one had given written support. None of the superintendents was at the meeting.

Although the county is generally required to take bids on services, no bids were taken and the court decided to amend the ordinance to say that due to time restraints and lack of knowledge of additional equipment-appraisal companies, the requirement for a bid was waived in the interest of Pope County.

Because the ordinance contained a dollar amount, the court did not have to read the ordinance three times. The ordinance and the new budget passed with all justices present and voting yes, except Larry Pettus, who abstained.